USD One

Byron Gilliam

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">subscribe</a>.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Half of the troubles of this life can be traced to saying yes too quickly and not saying no soon enough.”



— Josh Billings
</blockquote>



If you’ve ever tried meditation, you’ll know that doing nothing for more than about 10 seconds is weirdly difficult.



If you haven’t, you might not realize just how much the human mind rebels against inactivity — an evolutionary inheritance from when doing nothing meant starving on the savannah (or getting eaten), I guess.



These days, our bias for taking action is nowhere more evident than in financial markets, where the headlines are always imploring investors to take action: Something is happening, they tell us, and we’d better do something about it — now.



Only the most stoic among us can resist for long — traders, investors, gamblers and even business people are constantly reacting to events and placing bets on their consequences.



But events are rarely as consequential as we expect.



One measure of investors’ propensity to overreact to events is options pricing: An academic <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=375784">study</a> from 2003 found that traders so overpaid for put options on the S&amp;P 500 that they’d need equities to experience a 1987-sized crash once every nine months just to break even.



That hasn’t worked out so well: 22 years later, there has still only ever been one 1987-sized market crash.&nbsp;



(Mercifully, Black Monday’s vertiginous drop of 22.6% remains the biggest of all time.)



Another measure of our tendency to overestimate the probability of unlikely outcomes is found at the horse track.



Two researchers studying the “favorite-longshot bias” <a href="https://eriksnowberg.com/papers/Snowberg-Wolfers%20Risk%20Love%20or%20Decision%20Weights-NBER.pdf">concluded</a> that “longshots are overbet, while favorites are underbet.”



Betting on horses with odds of 100:1 or greater, they found, resulted in losses of 61% — far greater than the 23% loss that bettors would have incurred by placing their bets randomly.



A <a href="https://eprints.qut.edu.au/218538/1/EJ2012.pdf">study</a> of prediction markets similarly found a “long-shot bias” among bettors causes high-likelihood events to be underpriced and low-likelihood events to be overpriced.



The long shots do sometimes hit, of course.&nbsp;



When Leicester City won the English Premier League in 2016, for example, it turned <a href="https://www.espn.com/chalk/story/_/id/15447052/chalk-tales-bettors-bet-leicester-city-win-premier-league-season">one fan’s £5 bet</a> into a £25,000 payout — at 5:000:1, it was probably the longest-odds bet on a single sporting event ever to hit.



(Other 5,000:1 bets available at UK bookies implied that Leicester City winning the league was exactly as likely as Elvis being found alive or Barack Obama playing cricket for England.)



It’s fun to bet on something like that happening — it scratches our itch to believe that 1) extraordinary things happen more frequently than they do and 2) we have an ability to anticipate them.



Most of the time, though, you want to bet against things happening.



For example: One <a href="https://x.com/Polymarket/status/1911874780678009202?t=zN2GJ2pb0J3bupm5GnaFiA&amp;s=19">Polymarket bettor</a> recently made about $2.1 million betting “no” on seemingly everything.



When you look at some of the bets on offer, you can see why that might be a profitable strategy: Polymarket betting implies there’s a <a href="https://polymarket.com/event/will-canada-join-us-as-51st-state-in-2025?tid=1747153630203">4% chance</a> that Canada will be the 51st US state by the end of 2025 and that there’s a <a href="https://polymarket.com/event/what-will-happen-before-gta-vi?tid=1747153869987">13% chance</a> that Jesus will return before the release of Grand Theft Auto VI.



I imagine the people betting “yes” on those are doing it just for laughs (surely Grand Theft Auto won’t take that long).



But these “yes” bettors could be doing us a favor by illustrating the power of betting “no.”



Prediction markets show that people bet in anticipation of things happening far too often.



Horse racing shows that people anticipate extraordinary things far more frequently than they occur.



And financial markets show that, even when extraordinary things do occur, they’re typically less consequential than we expect — how else to explain US equities being unchanged on the year despite all the unprecedentedly dramatic news on tariffs?



Liberation Day turned out to be far less consequential than feared — not quite a nothing burger, but seemingly unimportant for long-term investors.



In the meantime, traders betting that the dramatic tariff headlines were inconsequential — betting as if nothing would happen — would have cleaned up.



This is not unique to tariffs — there have been enough such instances that “nothing ever happens” has become a modestly viral <a href="https://knowyourmeme.com/memes/nothing-ever-happens">meme</a>.&nbsp;



“Nothing ever happens” isn’t meant literally; it captures the idea that despite a non-stop drumbeat of headlines about dramatic events, markets (and life) often stay surprisingly stable.



Polymarket even lets you bet on it: As it defines it, the probability of “nothing” happening in May has risen to <a href="https://polymarket.com/event/nothing-ever-happens-may?tid=1747154136094">78%</a>.



Even at those odds, it might still be a good bet because people so optimistically overestimate their ability to predict what will happen.&nbsp;&nbsp;&nbsp;



This “optimism bias” is a good thing for society — if founders correctly assessed their chances of success, no companies would ever be founded.



But their success rate might improve if they spent less time thinking about what’s going to happen and more time thinking about what won’t happen.&nbsp;



Jeff Bezos notes that he frequently gets the question, “What&#8217;s going to change in the next 10 years?” and “almost never” gets the question: “What&#8217;s not going to change in the next 10 years?”



That’s unfortunate because the second question, he says, “is actually the more important of the two.”



Bezos says founders and business executives should think more about what won’t change because it’s easier to build a business around “things that are stable in time” (like Amazon customers wanting low prices and fast delivery, for example) than it is around things that will be different in time.



But investors, too, should probably spend more time thinking about what’s not likely to change — effectively betting “no” on the constant drumbeat of predictions about what’s going to happen — and how that will change everything.



It’s a better bet than we’re hardwired to think.



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The Breakdown Newsletter

Why investors should say ‘no’ more often

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Investors are going to have to wait a bit longer for a Solana ETF.



In a <a href="https://www.sec.gov/files/rules/sro/nysearca/2025/34-103030.pdf">filing</a> earlier today, the SEC said it had not “reached any conclusions” on the NYSE’s 19b-4 filing to list Grayscale’s spot SOL ETF. This was an expected outcome: The SEC has 240 days from when it first acknowledges a 19b-4 filing to reach a final decision. In Grayscale’s case, that would <a href="https://x.com/JSeyff/status/1887623038918660290">set</a> a final deadline sometime in October.



Like anyone with a deadline, the SEC appears likely to get closer to the due date before finishing its work.



The Polymarket odds for spot Solana ETFs’ approval in 2025 fell from 89% to 80% a little before 8:00 am ET. Interestingly, this trading swing came several hours before news aggregators started posting about the SEC filing. The ETF approval odds were back up to 82% at the time of publication.&nbsp;



SOL was unaffected by the news and is up 5% on the day.



Spot Solana ETF filings began emerging in the waning months of the Biden presidency, where a Gary Gensler-led SEC <a href="https://www.theblock.co/post/312031/the-sec-rejected-cboes-19b-4-filings-for-solana-etfs-source">reportedly</a> rejected 19b-4 filings, which are filed by exchanges. Analysts <a href="https://x.com/EricBalchunas/status/1887623284692271554">portrayed</a> the fact that Trump’s SEC acknowledged the filing for an ETF containing Solana — which the prior regime called a security — as newsworthy.



Trump has promised to <a href="https://blockworks.co/news/donald-trump-digital-asset-summit-address">make America</a> the “crypto capital of the world.” Many believe a Solana ETF fits squarely into that vision — and SEC approval is only a matter of time.



The bigger question now, I suppose, is how popular spot SOL ETFs will wind up being. The Solana investment vehicle du jour is currently treasury plays like DeFi Development Corporation, which has already <a href="https://www.globenewswire.com/news-release/2025/05/12/3079065/0/en/DeFi-Development-Corp-Purchases-Record-172-670-SOL-Surpasses-100M-in-Treasury-Holdings.html">purchased</a> more than $100 million in SOL a few weeks after launching.&nbsp;



When I <a href="https://blockworks.co/news/janover-to-receive-kraken-staked-sol">interviewed its new executives</a>, the publicly-traded real estate software company that now buys a ton of Solana said it sees the Strategy-like play as superior to ETFs. That’s partly because even if staked SOL ETFs gain regulatory approval — which is <a href="https://blockworks.co/news/us-sol-etfs-unlikely-to-be-approved-soon">no guarantee</a> — they would likely not be able to stake their entire balance and may also have to pay Coinbase validator fees.&nbsp;



Multiple other companies have now followed <a href="https://blockworks.co/news/sol-strategies-is-solanas-microstrategy">Sol Strategies’ lead</a> in trying to capture Michael Saylor’s bitcoin magic on Solana.



So while the SEC takes its time on deciding whether Solana ETFs should trade in the US, the investment landscape may be shifting beneath its feet.



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ETFs

SEC not ready to decide on Grayscale Solana ETF

Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance" target="_blank" rel="noreferrer noopener">subscribe</a>.



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The consumer price index for April rose 0.2% over the month and 2.3% over the year — marking the lowest annual inflation rate in more than four years. Core CPI (excludes food and fuel prices) also increased 0.2% in April, coming in at 2.8% annually.&nbsp;



If you’re wondering how April’s inflation figures could have been so tame in the wake of new tariff policies, there are a few reasons.&nbsp;



First, there historically has been a lag between tariff implementation and inflation rising. In May 2019, tariffs on $200 billion of Chinese imports were raised from 10% to 25%. A quick note that the increase was supposed to start in January 2019, but was delayed five months. Something to keep in mind as we try to predict what will happen today.&nbsp;



The May 2019 headline CPI report came in 0.1% higher month over month, compared with a 0.3% increase the month prior. Not too bad. The June 2019 core CPI, however, came in 0.3% higher on the month — the largest monthly increase since January 2018. Used car and truck prices — a decent proxy for tariff impact — increased 1.6% over the month in June 2019.&nbsp;



The anticipation of higher tariffs also had businesses stocking up their inventories in recent months, which could help delay any price increases passed on to consumers. How long that delay may last, though, is anyone’s guess.&nbsp;



Plus, a tariff-related decrease in consumer confidence and retail spending likely also contributed to lower prices.&nbsp;



Markets are still anticipating that the Fed will hold interest rates at its next meeting in June. That indicates traders expect the other “tariff shoe,” if you will, to drop. 



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Economy

Inflation in April rose less than expected, but tariff impact remains to be seen

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance" target="_blank" rel="noreferrer noopener">subscribe</a>.



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A day after the SEC’s tokenization-focused roundtable, an asset manager launched its first tokenized fund. We just saw stablecoin-related M&amp;A, too.



First, SEC Chair Paul Atkins reiterated Monday that SEC policymaking “will no longer result from ad hoc enforcement actions.” (Yes, the agency italicized “ad hoc” in the transcript.)



On tokenization, he likened securities moving onchain to the transition of audio recordings from vinyl records to cassette tapes to digital software.



“Blockchain technology holds the promise to allow for a broad swath of novel use cases for securities, fostering new kinds of market activities that many of the commission’s legacy rules and regulations do not contemplate today,” Atkins said.&nbsp;



But SEC Commissioner Caroline Crenshaw — <a href="https://blockworks.co/news/industry-opinions-on-sec-commissioner-crenshaw">not exactly known</a> for her crypto support — essentially told everyone to proceed with caution.&nbsp;



She questioned how great instant settlement actually is, noting the delay between trade execution and settlement provides for “core market functionalities and protection mechanisms.”



Crenshaw also asked why the SEC — a “tech-neutral regulator” — would focus on blockchain over other types of distributed ledger technologies?&nbsp;



“And we seem to be doing so before the technology has even been demonstrated as fit for purpose,” she added.



On that point, Crenshaw’s colleague Hester Peirce last week <a href="https://www.sec.gov/newsroom/speeches-statements/peirce-iismgd-050825#_ftn2">noted</a> the SEC crypto task force is considering an exemptive order to let firms issue, trade and settle eligible tokenized securities. So-called sandboxes “can help regulators think about how existing rules could be adapted to accommodate trading tokenized securities at scale,” Peirce explained.



Franklin Templeton’s Sandy Kaul urged “practical sandboxes” that don’t just test what the tech can do (we know that already) — but that inform legislation/regulations. She stressed too that “consumer opportunity” is as important as consumer protection.&nbsp;&nbsp;&nbsp;



Kaul joined execs from BlackRock, Nasdaq, Fidelity and others. A second panel included some smaller, DeFi-centric players.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXde_hrGBxwBD8jvc5FHvXSdcIoWgejLCCzj4fNr6sH8Pih9yuvY3sTrPWC6mpF-DvPPiSSAoj92eZBiwhC6NsFI21vRWcRGVG78mXk0xvKQ06xMB0Ke3p8kG1wf9tolu0B-s1phhQ?key=hmUspgZPRMV_GCM1SWKGJg" alt=""/></figure>



Philipp Pieper, co-founder of RWA protocol Swarm, said in an email that while the SEC’s engagement with TradFi titans validates this segment’s potential, DeFi founders must advocate for permissionless protocols and programmable assets to ensure regulations don’t sideline startups.



“We must prove RWAs’ value with tangible use cases, such as fractional ownership and liquid supply chain assets, to win over regulators and users,” Pieper said. “The sector must build compelling RWA platforms which demonstrate clear cost savings and liquidity solutions.”&nbsp;



<h2 class="wp-block-heading">Anchorage, VanEck making moves</h2>



Anchorage Digital CEO Nathan McCauley (after the news his company would buy Mountain Protocol) said: “Stablecoins are becoming the backbone of the digital economy.”



If stablecoins (with a $230 billion market cap) are like checking accounts (as Tokenized Asset Coalition executive director Johnny Reinsch put it during the roundtable), yield-bearing tokenized money market funds are like savings accounts.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc4ABPKNgKoX2Bnw_m7cAjoT1Krl7mrGdjkanwv0VRCdWea1fApd7wcYpd2r5IPx-gpdUu5ucBHb0KsMpWf5TigLP93Jl-MANglTEURuSjBXi8QfC0qKOZ-cHg_mNg1ozunwGtu?key=hmUspgZPRMV_GCM1SWKGJg" alt=""/></figure>



Speaking of which, VanEck is the latest to offer onchain access to US Treasury-backed assets via its new VBILL fund. Available across the Avalanche, BNB Chain, Ethereum, and Solana blockchains, VBILL facilitates atomic liquidity via Agora’s USD stablecoin (AUSD).



BlackRock’s BUIDL is perhaps the best known tokenized yield fund now. Its assets under management (as you see above) make up roughly 40% of the nearly $7 billion tokenized Treasury space, <a href="http://rwa.xyz">rwa.xyz</a> data shows.&nbsp;



Then there’s the <a href="https://blockworks.co/news/tokenized-rwa-segments-will-boom-next">opportunity to tokenize</a> public stocks, as well as private equities and credit.



Though stablecoin bill progress has <a href="https://blockworks.co/news/legislative-speed-bumps-genius-act-sec">hit a snag</a> in the US, these ongoing SEC talks — even if not Earth-shattering — signal the industry is getting closer to clarity.&nbsp;



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Forward Guidance

Crypto players eye more tokenization tests after latest SEC talk

Kate Irwin

This is a segment from The Drop newsletter. To read full editions, <a href="https://blockworks.co/newsletter/thedrop" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Sugartown — the “GameFi” platform that began its development while part of Zynga for years — is <a href="https://x.com/visitsugartown/status/1920571069942972795">launching</a> another NFT collection.



Zynga is the mobile gaming studio behind games like FarmVille and Words With Friends. The studio <a href="https://www.gamedeveloper.com/business/zynga-sells-off-web3-game-sugartown-to-d20-labs">sold off</a> Sugartown to startup D20 Labs in a <a href="https://x.com/visitsugartown/status/1829605016883155174?lang=en">move</a> that was reportedly part of a <a href="https://x.com/CashBowie/status/1921959690252206301">spinout</a> last year. Zynga’s crypto-focused staff also moved to D20 Labs.&nbsp;



Now, Sugartown’s latest drop is underway.&nbsp;



The 9,999 “Cores,” which will live on the Abstract blockchain, resemble scientific tubes filled with a mysterious liquid substance. They’ll cost 0.069 ETH (about $175) each to mint.&nbsp;



The team says Cores will give holders access to Sugartown’s Abstract minigames, rewards, and other features in the works like token staking.



The mint schedule and process for these Cores is a bit complicated. It prioritizes long-term believers and crypto degens over regular gamers or newcomers with little to no crypto experience.&nbsp;



Buyers who already bought Cores in a private presale have received them via <a href="https://x.com/visitsugartown/status/1922075582776414555">airdrop</a>. Then, those still holding their Sugartown Ora NFTs from late 2023 will be able to mint Cores. The Ora holder mint opens today, with a free mint occurring first and a paid mint taking place after.



The free mint phase goes from 8 am until 2 pm ET today, but you’ll only be eligible if you have three Ora NFTs in one wallet.&nbsp;



Then, from 2 pm today until 8 am ET tomorrow, anyone with at least one Ora will be able to mint two cores for a fee, plus an additional two mints per three Oras held.&nbsp;



Does this sound like a high school math problem yet?&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXclfLvUKEecG-P-RGn49wGPB0PCH_XutlDOEDnq6YoU2gsh-80DagXmfEixgfSQD3QNUhU5V9PhVFwfOQS2-Fx_F8TkysBsVvfGowJ6nabjuTy7tG7dO8u5U-_9U6qPwHthmEEpXw?key=Ze5MYxNXZMrkEh0Gizp6kA" alt=""/></figure>



Tomorrow, the allowlist mint will open for just an hour from 12 pm until 1 pm ET. At 2 pm Wednesday, a public raffle will occur, with no regular public sale.



Degens without any special NFTs or allowlist access will have to buy their way into the ability to mint in the last stage with “deposit entries” — the more entries bought, the higher the chance they might be able to mint. It’s like a lottery, but if you don’t get in, your entries will be refunded, according to the team.



A lot of this feels like it’s prohibitive for casual gamers, but suitable for degens. The Sugartown website remains token-gated, so I can’t even see if anything’s live there yet.&nbsp;



But Ora holders can get access to whatever’s on the other side.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXebiGYfvsuInxObkggsd8h8t8p5R-tja1TwadBOoKJ5jPdH92HWi49kZT_LDszlHapyMrP3y3VrE93mHTsRSpxKGB5Y1SBQEiYcbUiOb_omHBpWrEn4leYIt86CZWzWDD_Pz2z4Xw?key=Ze5MYxNXZMrkEh0Gizp6kA" alt=""/></figure>



Sugartown <a href="https://x.com/visitsugartown/status/1921340872475705830">advisor</a> Bharat Krymo argued that all crypto games have an element of gambling during an <a href="https://x.com/i/spaces/1MYxNwLmBdyKw">X Space</a> yesterday.&nbsp;



And Tommy Ngo — who is Sugartown’s co-founder, D20 Labs’ co-founder, and formerly Zynga’s head of Web3 product — said during that Space that he wants those who do snag Cores to feel “really rewarded” for hanging onto them.



But a disclaimer in the Sugartown Discord server tells buyers that the platform’s NFTs “are not an investment product or business opportunity.”&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc72pyAkEN21CSlrpSzmuMD9Eit41AEVtgubWkt2kfwOgNJLxhvo8cWfzCy9YAV6CnkET8BN9kl0uif9ZTUE9dA9rQVEsJwQeLH0pgBRuVWlVXgdhfowr5GX_-u065EDPnfDbQDDg?key=Ze5MYxNXZMrkEh0Gizp6kA" alt=""/></figure>



Sugartown is a game platform where players connect their crypto wallets and can choose from a number of different minigames, including gambling or “social casino” games, plus poker and “hypercasual,” fast-paced minigames.



There are three minigames so far, all crypto-themed: the 2D scroller NGMI, the climbing game ATH, and poker game RNPC (<a href="https://venturebeat.com/games/ex-zynga-web3-team-d20-labs-unveils-social-casino-poker-game/">Royal Nutz Poker Club</a>).



Abstract co-inventor Michael Lee has <a href="https://x.com/CashBowie/status/1921959690252206301">said</a> Sugartown has five games in the works in total.



Sugartown has also promised a token, <a href="https://x.com/visitsugartown/status/1901710133694017687">WIN</a>, at some point, but when that might launch remains unclear.&nbsp;



Abstract, a relatively new Ethereum L2 chain that’s tried to target crypto newbies, is home to a number of other gambling and social casino apps already with names that speak for themselves, like Gamblor, Riskiiit, and Koala Coin Toss.



Degen szn continues.



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</ul>

Gaming

Sugartown proves it’s still for degens with its latest mint

Donovan Choy

The following is part two of a multi-part series on the state of crypto liquid markets based on several conversations with liquid funds.



To read full editions of the the 0xResearch newsletter, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Yesterday’s <a href="https://blockworks.co/news/crypto-liquid-funds-bitcoin-target-this-cycle">0xResearch coverage</a> looked at how the institutionalization of bitcoin and an altcoin supply glut has made it harder to invest in any crypto asset that isn’t bitcoin.



What are liquid funds doing about it? How are they adapting?



Of the eight liquid funds I spoke to, seven mentioned the importance of “fundamentals.”



“Crypto can only grow if it attracts institutional capital, and institutions care most about fundamentals. This is still limited in pockets but is improving within crypto in meaningful ways,” Pantera general partner Cosmos Jiang told me.



Fundamental investing is a lot like painting a mosaic — what is sometimes called &#8220;mosaic investing&#8221; in traditional equities, he said. 



“Fundamental investors are building a mosaic of all the data points that exist today — both qualitative and quantitative — to predict the earnings power of this business in the future. What matters is not today&#8217;s metrics, but the cashflow potential of a business three to five years from now.”



What these metrics are, and how much they matter, depends largely on the context of the token’s business.



For instance, ParaFi Capital founder Ben Forman thinks valuable metrics for L1/L2 blockchains are “the total stablecoin and real-world asset supply issued on the chain” and “the velocity that those tokens are circulating.”



&#8220;Vanity metrics like TVL, which are often showcased by L1s but often involve wrapping of their native token, will be meaningfully less significant in the future,&#8221; Forman said.



While professional investors and data wizards still can’t agree on which metrics matter most, there is at least a common belief that narratives are no longer all that matters.



“In 2021, the majority of capital being deployed was not being done so through a fundamental lens,” Theia Fund’s Noah Goldberg argued in a previous <a href="https://x.com/Blockworks_/status/1897077974870245779">X space</a> with 0xResearch. “There was a lot of momentum trading, and retail capital that isn’t price-sensitive…Whereas today, I would say that a lot of capital in liquid markets is concentrated in the hands of funds,” he said.



One investor I spoke to pointed to how tokens with strong fundamental metrics tend to suffer less of a drawdown in a market crash.



The focus on fundamental investing also forces crypto to confront the industry’s most sacred narrative: the Bitcoin halving and four-year cycle.



Some, like Defiance’s Arthur Cheong, believe the four-year cycle of crypto has “officially ended.”



“As the marginal impact to supply of each successive halving event decreases, it will have less impact on the price going forward,” Cheong wrote in an investor letter.



Other funds dismissed the halving as irrelevant, since their mandate involved holding liquid tokens over time horizons longer than four years.



Another fund called the four-year cycle a “meme,” pointing to interest rate cycles as the real risk-on and -off toggle.



Pantera’s Cosmo Jiang <a href="https://panteracapital.com/blockchain-letter/looking-past-tariff-volatility/">saw</a> bitcoin’s historical bull rallies as simply having coincided with global liquidity cycles, like the Eurozone debt crisis in 2012, Brexit in 2016 and Covid in 2020.



In the third and final part of this series, we’ll finally dive into some of the crypto sectors that liquid funds are looking at.



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Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

0xResearch Newsletter

Crypto liquid funds are turning to fundamentals to navigate a sea of altcoins

David Canellis

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Money is speech.



Those three words are arguably the most succinct way to express the importance of Bitcoin.&nbsp;



To the idealist, Bitcoin is an obvious frontier in the war for personal freedoms. It embodies the freedom to transact in the same way that art and newspapers represent freedoms of expression and speech.



Today’s Supply Shock episode features legendary Cypherpunk Phil Zimmermann, the creator of Pretty Good Privacy (PGP) who fought tirelessly for our freedom of digital privacy during the 1990s. Check out one of our <a href="https://blockworks.co/news/cypherpunk-movement-history-wired-1993">previous retrospectives</a> for a primer on Zimmermann.



Who better to ask, considering his long-term collaboration with Bitcoin pioneer <a href="https://bitcoinhistorynl.beehiiv.com/p/user-1?utm_source=bitcoinhistorynl.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=user-1">Hal Finney</a>: If PGP was the frontline for the first Crypto War, is Bitcoin the battleground for Crypto War II?



<h2 class="wp-block-heading">From The Pod</h2>



Phil Zimmermann formally hired Hal Finney in 1996, almost a decade and a half before Bitcoin — back when “crypto” only really meant “cryptography.”&nbsp;



Hal had spent years developing PGP with Zimmermann officially as a <a href="https://web.archive.org/web/20170915204932/https://www.nytimes.com/2014/08/31/business/hal-finney-cryptographer-and-bitcoin-pioneer-dies-at-58.html?ref=obituaries">volunteer</a>, partly because PGP was not yet a company, and partly to avoid drawing the ire of the US government that had rained down on Zimmermann.



Zimmermann told Supply Shock host Pete Rizzo that he knew Hal was exploring proof-of-work projects, and said he himself found Bitcoin technically intriguing. However, he was working on other things at the time, which kept him from becoming wrapped up in early Bitcoin development in the same way Hal was.



“For the first time, you actually had a feasible electronic money scheme that was decentralized,” he said. “I mean, we&#8217;ve had electronic money for a long time just by banks…I think [Bitcoin] was a very creative breakthrough in the development of digital money.”



More recently, Zimmermann has been a headline feature of the Bitcoin conference circuit, appearing on stage last October <a href="https://www.youtube.com/watch?v=7Axo2CGwY00">alongside</a> Adam Back at the Plan B Forum in Lugano, Switzerland.



Bitcoin events have shown Zimmermann the positives of Bitcoin, particularly for those living under autocracies, as is the case across Latin America.



“The dictator executes his control over the population in a variety of ways. Some of them are violent, but sometimes he just takes their money,” he said. “Singapore has a high standard of living, high salaries and high percentage of home ownership. Everybody gets a pension when they work and the government there has control of that pension. If you criticize the government, you might lose your pension.”



“And so, if you live in an autocracy, it would be useful to have some of your assets in bitcoin so that it&#8217;s out of reach of the autocrat. I met a lot of people in Argentina at the Bitcoin conference there that had stories to tell about the places where they had used Bitcoin to protect some of their assets.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/MpCGYFXn5cI?si=M5XkkjyRVXx_ol9N" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Still, Zimmermann’s relationship with Bitcoin is complicated, in many of the same ways that his connection with his own creation, PGP, was conflicted. Zimmermann lamented that he knew for a fact that PGP was in Al-Qaeda training manuals, for instance, but at the same time, the technology was a force for good elsewhere in the world.



“In the 90s, when we were engaging in the debate about strong cryptography and especially PGP…Some advocates for strong cryptography were denying that criminals use PGP — they were denying that terrorists were using PGP.&#8221;



He continued: “[PGP was also] used in lots of environments where there was great danger to people who lived in wartime conditions. I got letters from people who lived in places where people were being killed by oppressive governments or war, and PGP was saving lives. So these technologies quite often have mixed effects on society, and that includes Bitcoin. I would like to see more examples of Bitcoin being used for good.”



Check out the full episode of Supply Shock on <a href="https://www.youtube.com/watch?v=MpCGYFXn5cI">YouTube</a>, <a href="https://podcasts.apple.com/us/podcast/pgp-creator-bitcoin-is-not-the-revolution-you-think/id1558223079?i=1000708295114">Apple Podcasts</a> and <a href="https://open.spotify.com/episode/5rFyKjI5rwurM3Vf1UXffH">Spotify</a>.



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Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Bitcoin

‘It’s out of reach of the autocrat’: How Cypherpunk Phil Zimmermann feels about Bitcoin

Katherine Ross

Jack Kubinec

Some employees at Bitget’s new blockchain, Morph, initially thought of the L2 network as a potential future rival to Coinbase’s Base.&nbsp;



But sources familiar with the project tell Blockworks that Morph has been stymied by internal dysfunction. Sources claim that since a $20 million <a href="https://www.prnewswire.com/news-releases/morph-announces-20mm-fundraise-in-seed-and-angel-investment-302094646.html">seed raise</a> in March of last year, team conflicts, flashy spending and a mysterious “shadow CEO” have led to layoffs, delays and a loss of direction.&nbsp;



Blockworks spoke with a dozen current and former employees who were granted anonymity to share candid details of what went wrong inside one of Bitget’s most public bets.



<h2 class="wp-block-heading">Morph’s beginnings</h2>



Exchanges are crypto’s largest apps. One way these digital asset titans capitalize on their popularity is by launching their own blockchains.&nbsp;



Binance first <a href="https://www.binance.com/en/blog/all/bnb-smart-chain-launches-today-421499824684900933?hl=en">launched</a> the BNB Chain in 2020. Coinbase launched an Ethereum layer-2 named Base in 2023. Kraken, OKX, and Gate.io have all built or are building blockchains.&nbsp;



These chains can be lucrative. Base generated $76 million in gross profit in 2024, per Blockworks Research.



It was in this context that an L2 named Morph became a hot ticket after being incubated by Bitget, the 10th largest exchange by <a href="https://www.coingecko.com/research/publications/largest-centralized-crypto-exchanges#which-exchanges-have-lost-market-share-since-2020">spot volume</a>. But instead of following a more classic startup model where two co-founders come together with a single idea, Morph saw two co-founders who didn’t know each other become paired together.&nbsp;



The team behind Morph brought in Azeem Khan — who lives in the US and was previously head of impact at Gitcoin — and Cecilia Hsueh, who is based in Singapore, according to her LinkedIn. Hsueh was formerly chief marketing officer and, briefly, the CEO of the crypto exchange Phemex. She was tapped as CEO of Morph, while Khan became chief operating officer.



Things looked bright at first. As crypto fundraising began to recover, Morph raised $20 million in seed funding from US-based venture firm Dragonfly. Other investors included Pantera, MEXC Group, Bitget’s venture arm Foresight Ventures, and Spartan Group.



Bitget and Foresight didn’t return multiple requests for comment on Morph. Dragonfly and Pantera declined to comment when reached.



Morph’s mainnet went <a href="https://decrypt.co/289113/morph-announces-mainnet-launch-on-ethereum-paving-the-way-for-consumer-blockchain-adoption">live</a> in late October of last year. According to Morph’s <a href="https://morphl2.socialscan.io/">block explorer</a>, the L2 had roughly 16,000 transactions on Monday, May 12. To put those numbers in perspective, Base averages several million daily transactions, per a Blockworks Research dashboard.



The launch was only half the battle. The other big goal was to launch a token, former employees recounted, but this has yet to materialize.&nbsp;



Last month, Morph <a href="https://morph.ghost.io/morph-platinum-nft-sale-is-live/">teased</a> that folks who mint so-called Platinum NFTs would be “securing their position in the ecosystem at a $500 million FDV valuation, with 50% token unlock at TGE.”&nbsp;



The seed round had put Morph at a $125 million valuation in March 2024, according to a person familiar.



Since the raise, however, Bitget’s layer-2 has experienced a turbulent year.&nbsp;



<h2 class="wp-block-heading">‘Ghost founder’</h2>



As Morph staffed up and tried to bring a working blockchain to market, cracks emerged among its leadership.



People familiar described tension between Hsueh and Khan, who did not know each other before being tapped as co-founders.



Khan declined to comment when reached by Blockworks.



Bitget, which is not available in the US, has seen strong growth the past few years in Africa, South Asia and Southeast Asia, <a href="https://www.bitget.com/blog/articles/bitget-2024-year-in-review">according</a> to company data. Morph initially aimed to reach users in the Global South who are not being served by other exchange blockchains, as co-founder Azeem Khan explained in a CoinDesk <a href="https://www.youtube.com/watch?v=2j7oh5lfCpU">interview</a> last year.



Strategically, Khan and Hsueh were not always aligned, per several sources. While Khan talked about emerging markets in press appearances, those initiatives were slow to materialize internally, former employees recounted. A team that spent months planning out activations in those markets was told they wouldn’t receive a budget, a source said.



Stranger still, employees who spoke to Blockworks sensed that neither Khan nor CEO Hsueh seemed to always have the final say on things.



One employee described Khan as being more like a “ghost founder” than an actual co-founder, and noted they’d never seen anything like it throughout their crypto career.



A lot of decision-making power seemed to rest with Forest Bai, a co-founder and partner of Foresight Ventures (Bitget’s venture arm and an investor in Morph) as well as chair of The Block. Multiple people confirmed that Bai was like a “shadow CEO.” Sources noted that he had oversight on things like spending and company strategy.



Khan announced that he was leaving Morph in March, noting in an X post that stepping down was “the best path forward for me.” He’s since <a href="https://polygon.technology/blog/miden-raises-25m-from-a16z-crypto-1kx-and-hackvc-to-build-the-edge-blockchain">emerged</a> as a co-founder of a different blockchain named Miden.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">After careful consideration, I’ve chosen to step down from my position as co-founder &amp; COO of <a href="https://twitter.com/MorphLayer?ref_src=twsrc%5Etfw">@MorphLayer</a> . This was not a decision I took lightly, but ultimately after thinking it over, this is the best path forward for me. I’d like to take a moment to thank all my…&mdash; azeem (@azeemk_) <a href="https://twitter.com/azeemk_/status/1902933187296190593?ref_src=twsrc%5Etfw">March 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The lack of alignment and independent decision-making power contributed to Khan’s departure, according to multiple people familiar.



Hsueh has stayed on as CEO — although her power internally has allegedly waned further in recent months, three people told Blockworks.



<h2 class="wp-block-heading">Who’s really in charge?</h2>



Nearly everyone Blockworks spoke to described Hsueh as having a limited understanding of the technical ins and outs of blockchain. While it’s not a prerequisite for an executive to be crypto-native, sources claimed that Hsueh was out of touch with blockchain users and didn’t show an interest in learning about the technology, creating a feeling that Morph lacked clear strategic direction.



Instead, Hsueh was preoccupied with growing her online presence, sources said. Three ex-employees recounted being asked to engage with her posts. Others added that Hsueh would prioritize <a href="https://x.com/cecilia_hsueh/status/1851610014697361890">announcements</a> about Morph on her personal account over the official account.&nbsp;



At one point, Hsueh took to posting pictures of her feet on X.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">ran into some crypto folks and it went like this. guy: hey, aren’t you the founder who posts all those feet pics? me: yeah, i’m just really down to earth like that. <a href="https://t.co/A1ljUcNC6A">pic.twitter.com/A1ljUcNC6A</a>&mdash; Cecilia Hsueh 🐨 (@cecilia_hsueh) <a href="https://twitter.com/cecilia_hsueh/status/1846201866981642571?ref_src=twsrc%5Etfw">October 15, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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It’s unclear how much power Hsueh still holds, though an ex-employee described her as being “teflon.”



While she’s listed as the CEO in company documents, Foresight Ventures co-founder Forest Bai’s name appears next to hers on an internal organization chart shared with Blockworks.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd4a58UnMCtLHzaM-MMfwbiwnjBL1mMhIjaPApqsLYcWGP9p2P5s1pva4ovdBcd1led3MeMi50_8LybdDutbTnIwzGWzJBvRGGTZUQxTgmKWgM2JmvJ3Y7AVy-HmLB4aJ2twHzL?key=3cJcF7ftMvN2nPy8lwbXgJZM" alt=""/><figcaption class="wp-element-caption">An edited screenshot from Morph’s organizational chart showing Bai and Hsueh’s roles</figcaption></figure>



Neither Hsueh nor Bai returned emails or messages requesting comments.&nbsp;



While Bai has taken more control in recent months — having been officially added to the company Slack, per three sources familiar — others noted that he held sway over both Khan and Hsueh before Khan’s departure. Officially, Bai is listed as a consultant in internal Slack messages seen by Blockworks.



Another internal Slack message shared with Blockworks requested Bai’s presence in ecosystem and marketing team meetings.&nbsp;



<h2 class="wp-block-heading">Deal or no deal?</h2>



In 2024, Morph was a big spender, four people said. Granted, the company had just finalized a $20 million raise.&nbsp;



But the spending included events with K-pop band tripleS, where Morph allegedly covered the group’s travel and accommodations, one source told Blockworks. An invite on Lu.ma, a popular website utilized by projects planning post-conference events, teased a “special performance” by tripleS in April of last year. The <a href="https://lu.ma/KpopParty">event</a> was hosted by Zircuit, Bitget, Morph, Foresight Ventures and Quantstamp.



Multiple sources discussed Morph spending hundreds of thousands of dollars on events at crypto conferences. At Token2049 in Singapore, Morph hosted an all-day side event at Singapore’s ArtScience Museum, sources noted. A Lu.ma <a href="https://lu.ma/yb8ouaam">invite</a> shows that the event was attended by the likes of Vitalik Buterin, Avara’s Stani Kulechov and Aptos’ Mo Shaikh, with popular South Korean performer DJ SODA as the main act at the afterparty.



The large event spending didn’t align with the return on investment or bottom line, another source noted. And, while events seemed to get money, Hsueh seemed reluctant to greenlight actual business deals, people familiar told Blockworks.



The bright side of the company’s spending, per a source familiar, was that Morph initially compensated its employees competitively.



Outside of events, there were discussions for a physical office in New York City that culminated in a space on One World Trade Center’s 77th floor, three sources told Blockworks.&nbsp;



The office is also shared with Foresight and The Block, though it’s unclear who’s on the lease.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Such a pleasant view from the <a href="https://twitter.com/MorphL2?ref_src=twsrc%5Etfw">@MorphL2</a> office <a href="https://t.co/6dZLnKR8QJ">pic.twitter.com/6dZLnKR8QJ</a>&mdash; azeem (@azeemk_) <a href="https://twitter.com/azeemk_/status/1861501600277090391?ref_src=twsrc%5Etfw">November 26, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



On the developer side, Morph once paid a team of developers over $200,000 to build a fork of Uniswap v2, according to multiple sources. Since Uniswap’s code is open source, one ex-employee felt that the project overpaid for the DEX, which became known as BulbaSwap. BulbaSwap currently holds around $93 million in total value locked, according to DeFiLlama, making it around the 200th-largest DEX by that metric.



<h2 class="wp-block-heading">The ‘dark arts’</h2>



Morph’s burn rate may have been offset by a planned Series A fundraise, but a fresh funding round is yet to materialize.&nbsp;



“We are looking for our next round,” Hsueh said in an <a href="https://www.youtube.com/watch?v=BMatGF85v0M">interview</a> with Web3TV in September, noting that “running a chain is very expensive,” and the company was looking to grow its headcount.



However, people familiar noted that there were tensions around a Series A prior to Khan’s departure. Bai, two people familiar said, pushed for Morph to raise another round.&nbsp;



Blockworks was unable to determine the current status of the Series A.



Even without the raise, a source familiar told Blockworks that Morph isn’t out of money yet, and it’s still backed by Bitget.



Morph didn’t return multiple requests for comment.



Meanwhile, Morph has had some trouble retaining talent. One ex-employee said it’s faced a “crazy amount” of turnover, from departures to layoffs. Some employees have also taken salary cuts, others noted.



Multiple employees said they didn’t receive token contracts. According to one source, Morph attempted to force some employees who did receive contracts to sign new ones in May of last year which would have changed their vesting periods.



Another source told Blockworks that the departures have left some teams depleted, and some Slack channels have little to no activity. Despite the hardships, Morph still plans to launch its token by the end of this year, a person familiar said.



For investors, Morph’s saving grace may be its connection to Bitget, which may yet be keen to list Morph’s forthcoming token at launch.



Bitget understands the “dark arts” of facilitating trading around tokens that may have questionable value, said an ex-employee.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Bitget

Morph, Bitget’s L2, is stymied by founder disputes, lavish spending and power struggles: Sources

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



A new perps DEX is entering the chat.&nbsp;



The team exclusively told me that Perpl, a decentralized perpetual futures exchange, raised $9.25 million from Dragonfly to build on Monad.&nbsp;



Other participants in the round include Ergonia, Brevan Howard, Breed, L1D and CMS.&nbsp;



I had a chance to speak with co-founder PB, who told me that he and his cofounder — both Americans — left the US to build Perpl in London. They’ve since hired a London-based team. Surprise, surprise, the decision came due to the lack of regulatory clarity in the US.&nbsp;



PB isn’t writing off the US entirely, though, noting that if the laws change, Perpl would consider opening up to the market — it’s just not currently in the cards.&nbsp;



Perpetual futures, or perps, are becoming more of a popular product, especially in crypto. Just last week, Coinbase <a href="https://www.coinbase.com/blog/24-7-futures-trading-has-arrived">teased</a> that 24/7 perps were “coming soon” after announcing 24/7 futures trading.&nbsp;



“I think the thing with perps, specifically, is how simple it is. With options, there&#8217;s just a lot of complexity. There are expirations, there&#8217;s just a lot more math for users to be aware of. But perps, it&#8217;s very simple, never expires,” PB explained.&nbsp;



“You just have to keep track of liquidations. And then that also helps with getting all the liquidity in one place. With options, since you have expirations, you have liquidity each month, but with perps, all liquidity for the assets is in the same place. More liquidity, better trading experience.”



What PB noticed is that crypto traders like the ease of access that perps offer. There’s also the added benefit that a project like Perpl can move faster on a token listing than, say, a Coinbase.&nbsp;



“With perps, you just need an oracle price and USDC, and you can start immediately taking a position. If you were to rewind back to maybe a couple of years ago, you needed a Binance or one of these central exchanges to actually list perps, but with DEXs, they&#8217;re able to list these tokens faster,” he explained.&nbsp;



Perps DEXs are “broken in a very interesting way,” PB told me. Basically, there are infrastructure and engineering issues and then the DEXs make some trade-offs to account for them, but Perpl claims to be different.&nbsp;



“What Hyperliquid has done with a cloud-based perp DEX has shown that the market appetite is there for something that has a deep liquidity. What we&#8217;re really excited for is to see how the composability angle plays out with that,” he added.&nbsp;



Perpl plans to utilize the EVM architecture from Monad to build its onchain central limit order book. But the downside is that, since it’s on Monad, it won’t be able to launch mainnet until Monad itself goes live. It does, however, plan to launch testnet by the end of the year.&nbsp;



“We&#8217;ve raised enough money to help us sustain ourselves if testnet or mainnet takes longer, but we want to get it onto testnet by the end of this year, just because we want people to try it,” he said. “There are going to be bugs that they&#8217;re going to be able to find. No matter how much we test internally, [nothing beats] user testing, so we want them to be able to get their hands on it.”



But PB and the team aren’t too worried if Monad’s mainnet takes longer than anticipated; they’ll just be building up the features on Perpl in the meantime.



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Dragonfly Capital

Exclusive: Perpl raises $9.25M from Dragonfly to build on Monad

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">subscribe</a>.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Leaders get killed from below.&#8221;



— Clay Christensen
</blockquote>



In <a href="https://www.amazon.com/Innovators-Dilemma-Technologies-Management-Innovation/dp/142219602X?tag=googhydr-20&amp;hvsb=Media_d&amp;hvcampaign=dsadesk">The Innovator’s Dilemma</a>, Clay Christensen introduced the concept of disruptive innovation — when a product that initially looks like a cheap knockoff ends up rewriting the rules of an entire industry.



These products typically get their start in either low-end or entirely new markets that incumbents have ignored because they were either not profitable enough to serve or didn’t seem strategically important.



But that turns out to be a good starting point: “A disruptive technology is initially embraced by the least profitable customers in a market,” Christensen explained.



These customers are often eager to adopt a product that is initially inferior in terms of traditional performance metrics, but cheaper, simpler and more accessible to them.



Christensen cites the example of Toyota, which got its start in the US market by targeting budget-conscious customers that the Big Three US automakers had overlooked.



The incumbents’ focus on bigger, faster, more feature-rich cars had created “a vacuum underneath them,” in Christensen’s telling, and Toyota filled that vacuum with the slower, smaller, no-frills Corona, which cost just $2,000 when it was introduced in 1965.



Today, Toyota is the second-largest automaker in the US — and its Lexus LX 600 Luxury SUV starts at $115,850.



Toyota used the Corona to wedge its way into the US market and then steadily climbed the value chain, proving Christensen’s thesis that the best way to the top is to start from the bottom.



Stablecoins may be on a similar trajectory.



<h2 class="wp-block-heading">Disruption is coming</h2>



Christensen’s disruptors started in niche markets — and stablecoins started in emerging ones.



For people in the United States with access to bank deposits, stablecoins are essentially an inferior kind of dollar — not FDIC insured, not properly audited, not integrated into ACH or SWIFT and (despite the name) not always exchangeable for $1.&nbsp;



For people outside of the United States, however, they are a better kind of dollar — unlike $100 bills, you don’t have to hide them, they won’t get torn or defaced, and you don’t have to meet someone face-to-face to exchange them.



This has made US dollar stablecoins wildly popular in countries like Argentina — one-fifth of Argentines are <a href="https://cryptoforinnovation.org/will-argentina-become-the-first-crypto-economy/">said</a> to use them daily — even as few people in the US could tell you what they are.



Argentina is not the only place stablecoins are used, of course — stables are popular with DeFi traders, anyone who can’t pass a KYC check, emigrants sending remittances home, employers paying cross-border freelancers and savers escaping their local hyperinflating currency.



None of these are profitable enough as customers for incumbent banks to bother with, so it didn’t matter that stablecoins started out as inferior to bank-issued money.



For a while, people were so desperate for digital dollars that they didn’t even seem to care whether Tether’s USDT was fully backed.



They are much improved since: Circle offers a regulated alternative to USDT, Tether itself appears to be playing it by the book too, and some stablecoins even offer yield.&nbsp;



But is this innovation truly disruptive?



The <a href="https://www.christenseninstitute.org/theory/disruptive-innovation/#:~:text=Disruptive%20Innovations%20are%20NOT%20breakthrough,make%20products%20and%20services%20more">Christensen Institute</a> has a six-part test to determine whether an innovation qualifies as disruptive:



Does it target non-consumers or people who are overserved by an incumbent’s existing offering in a market?



Yes — DeFi traders and emerging market savers don’t need FDIC-backed US bank deposits (they’d be “overserved” by a full US bank account), but they do want digital dollars.



Is the offering not as good as an incumbent’s existing offering as judged by historical measures of performance?



Yes — stablecoins have deviated from their $1 peg, gone to zero (Luna/UST), can be expensive to on- and off-ramp, and can be frozen without recourse.



Is the innovation simpler to use, more convenient or more affordable than the incumbent’s existing offering?



Yes — sending stablecoins is easier than sending bank deposits, are more convenient for many, and more affordable for some.



Does the offering have a technological enabler that can carry it upmarket and allow it to improve?



Yes — blockchains!



Is the technology paired with a business model innovation that allows it to be sustainable?



Maybe? Tether may be the most profitable company in history on a per-employee basis, but if US regulators allow stablecoins to pay interest, issuing them might not provide any profits at all.&nbsp;



Are existing providers motivated to ignore the new innovation and are not threatened at the outset? No. Incumbents seem alert to the threat and aware of the opportunity. “Almost always, when low-end disruptions emerge, it creates a situation where the leaders in the industry actually are motivated to flee rather than fight you,” Christensen <a href="https://online.hbs.edu/blog/post/low-end-disruption">writes</a>. “That’s why low-end disruption is such an important tool to create new growth businesses: The competitors don’t want to compete against you; they just walk away.”



Stablecoins may be a rare exception: Instead of walking away from the low-cost innovation of stablecoins, incumbents appear to be racing toward it.



The payment incumbents Visa, Mastercard and Stripe have all announced new stablecoin offerings in recent weeks; BlackRock’s BUIDL fund (which looks like a yield-paying stablecoin) is rapidly attracting assets; the CEO of Bank of America says it’s likely to issue a stablecoin as soon as regulators allow it.&nbsp;&nbsp;



That might be because finance executives have all read The Innovator’s Dilemma.



Or it might be because stablecoins are so easy to issue.&nbsp;&nbsp;



Christensen frames disruptive innovation as company driven — where startups use low-end beachheads to claw their way into the mainstream before incumbents take them seriously.&nbsp;



And that might be how it works out for stablecoins, too: The <a href="https://www.businesswire.com/news/home/20250421041939/en/Circle-Announces-Payments-Network-to-Transform-Global-Money-Movement">Circle Payments Network</a> may be to Circle what Lexus was to Toyota.&nbsp;&nbsp;



But Circle’s competition isn’t as sleepy and slow moving as Toyota’s, so it’s entirely possible that stablecoins&#8217; early innovators will, in an inverse of Christensen’s theory, be killed from above.



The end result could be the same either way: A recent Citi report predicted that stablecoin AUM could hit $3.7 trillion by 2030, largely because of institutional adoption.



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Stablecoins are disruptive, but who will be the disruptors?

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Blockchains store a ton of data, and the bloat is only growing bigger.



A little over a year ago, Nirvana Labs <a href="https://blockworks.co/news/nirvana-alternative-to-google-cloud-aws">released its cloud offering</a>. It promised a crypto-tailored computing service that could undercut Amazon Web Services and Google Cloud — the industry computing incumbents — on price.



Now, Nirvana has raised an additional $6 million in seed extension funding co-led by Jump Crypto and Crucible Capital, Lightspeed has learned exclusively. RW3 Ventures, Castle Island and Hash3 VC all also participated in the round, which brought Nirvana Labs’ total funding to $11.8 million.



Some blockchain node operators use cloud providers like AWS and Google Cloud because the services make it possible to use servers and storage without housing their own physical hardware. This reliance on the internet giants for computing resources creates some centralization <a href="https://www.dlnews.com/articles/defi/ethereum-decentralisation-threatened-by-reliance-on-amazon/">risks</a>, however, and it can also prove costly for crypto operators — especially on a high-throughput chain like Solana.



“[A] single Solana Archive Node is 700TB — that&#8217;s an insane amount of storage,” Crucible Capital founder and general partner Meltem Demirors said in a text message. “AWS and Google Cloud own 80%+ of this market today, which makes no sense because one month of NVME storage on AWS costs almost as much as just buying the hardware outright.”



Nirvana makes use of bare metal infrastructure where each server houses a single client, as opposed to traditional cloud providers which pool computing resources. Nirvana also boasts CPUs optimized for demanding workloads — like those faced by blockchain operators — and data center diversity that could make blockchains more resilient against things like outages.



The crypto cloud service can also be much cheaper than AWS or Google Cloud because Nirvana leases hardware directly from data centers and co-locates storage, which removes middlemen, Demirors said.



Demand for Nirvana’s services tends to come from infrastructure and tooling providers like BitGo and Fireblocks, as well as protocol foundations like Avalanche and Berachain, Demirors told me. Nirvana is also planning to work as a frontend to help organizations deploy on the internet filtering startup DoubleZero.&nbsp;



In a press release, Nirvana Labs said its revenue has grown by 26x since January 2024, and the cloud service now handles more than 2,000 terabytes of blockchain data.&nbsp;



Following the round, Demirors will join Nirvana Labs’ board, where she will be joined by Nirvana’s CEO and chief technology officer, a representative from RW3 Ventures, and a final “independent,” likely to be an industry executive, Demirors said.



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Lightspeed Newsletter

Cloud startup Nirvana Labs raises $6M seed extension led by Jump Crypto, Crucible Capital

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The 2021-era Ethereum NFT collection Doodles, which some have long considered to be a “blue chip” collection, launched its <a href="https://blockworks.co/news/doodles-solana-token-criticisms">anticipated DOOD token</a> on Solana this past Friday.



DOOD launched, briefly had a market cap of over $100 million, and then abruptly fell to a market cap of roughly $52 million. The token has since held around that point, and sits at a <a href="https://www.geckoterminal.com/solana/pools/5KXE8RMF7iW9Ptn665AHfzsMFjYb4LV2Ta8eZEtsTwWC">$54 million</a> market cap across about <a href="https://solscan.io/token/DvjbEsdca43oQcw2h3HW1CT7N3x5vRcr3QrvTUHnXvgV#holders">159,000 wallets</a> as of this morning.



Doodles head of strategy and business development Austin Hurwitz told me in a message that the sudden price drop after launch was “expected” because the airdrop that occurred created “sell pressure on day 1.”



“We expect those tokens to rotate into the hands of people who want to hold for the long run. Would not judge the performance of the token based on launch. Every NFT launch that was given to the community at TGE has faced similar hurdles but we’d do it all over again to put our community first. Now that it’s out we can continue [to] focus on building for the future,” Hurwitz told me.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdygxEPEnnU26RCxhANy1TwC1-hTnaa0-cJkIn3R4hx0EPxLox6z9jlF-RV_k4Tir9LwN5flBEYrfroLQcuyxTiTQHse8zM1L4KrRK3u-RNyibaJGIaUc8ahXoeZGhxdtskBApZ?key=Dx9jj8VE76MnKTTzxHXLFQ" alt=""/><figcaption class="wp-element-caption">Image: DOOD’s market cap since launch.</figcaption></figure>



Here’s the thing: The Doodles team doesn’t want you to see DOOD as just a memecoin. Still, Hurwitz said the token is “memetic.”



In a post, he <a href="https://x.com/austin_hurwitz/status/1921674592487182672?s=46">explained</a> that DOOD is “the first universe token” of <a href="https://dreamnet.doodles.app/what-is-dreamnet">DreamNet</a>. DreamNet is a content-focused protocol from Doodles that uses Coinbase’s Base chain. The Doodles team has plans to make DOOD usable across “collectibles, gaming, DeFi and beyond.”



The token is expected to become a usable currency in the Doodles shop in <a href="https://x.com/austin_hurwitz/status/1921704059335065788">a few days</a>.



Doodles’ broader brand vision these days sounds a lot like that of Pudgy Penguins, perhaps its most obvious comparison. The Penguins also have cutesy avatars and the goal of becoming a mainstream character brand (and have gained some traction with <a href="https://www.instagram.com/pudgypenguins/?hl=en">social media</a> posts and <a href="https://www.walmart.com/search?q=pudgy+penguins">Walmart toys</a>).&nbsp;



Doodles, like Pudgy Penguins, is planning content, “shorts, brand collabs and merch drops,” but also wants to be powering a “decentralized storytelling movement.”



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Doodles

Doodles’ DOOD token falls on launch, but team is planning its future

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The following is part one of a multi-part series on the state of crypto liquid markets, based on several conversations with liquid funds.



It’s an open secret that most crypto liquid funds are underperforming.



Liquid funds work similarly to traditional hedge funds: Pick a market direction, deploy capital and outperform a benchmark.



Unlike hedge funds, however, the yardstick to beat is not a composite benchmark like the S&amp;P 500. Crypto liquid funds are in the game to beat bitcoin.



For example, bitcoin appreciated ~110% in 2024. Any liquid fund performing below that benchmark is underperforming, or considered average at best.



Unfortunately, the rise of orange coin means liquid funds have a much harder job.



Bitcoin has generally held steady on a year-to-date basis while the rest of the altcoin market has plunged <a href="https://blockworks.co/news/altcoin-season-over-memecoins-value">into oblivion</a>.



Consider bitcoin dominance (BTC.D), which has steadily climbed over the past year to 63% today against a total crypto market cap of $3.3 trillion.&nbsp;



Contrast that to last cycle’s market cap peak in November 2021 when BTC.D hovered at the 40-45% range.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdN5m_JQVSW8M6fpEY1bwSynL1z9hrVQhB7ji2cmsb09W1xCDRmf0GwD7FSWDUjUCu0tpF61yaI3tKq8EnDTIxmPXM75QUd7O3nkPRG-xlt1k5lDQcHBZseXjS8mlrdliNZcYHq?key=_-mt5O6Y3hKcCIFMy0XEtw" alt=""/></figure>



VCs such as DBA’s Jon Charbonneau even question BTC as a benchmark. The appropriate benchmark may be a weighted-average basket of alts like ETH, SOL and BNB, <a href="https://youtu.be/dMSHYjk3b8U">Charbonneau said</a> on the 0xResearch podcast.



This likely explains the noticeably bearish vibes in the Crypto Twitter echo chamber despite bitcoin hovering close to its all time-highs. Many higher risk-seeking investors are positioned on the thesis that altcoins would surge harder than bitcoin, and therefore have been “sidelined” from BTC’s rally.



Pantera’s Cosmo Jiang told me: “It’s not great right now. Most directional liquid funds are probably negative against BTC. For the market-neutral liquid funds, industry averages are irrelevant. Yet they too are having a bad year, but that means they’re generally flat on performance, not positive.”



Practically every liquid fund I’ve spoken to agrees that bitcoin has situated itself as an institutional/macro asset, or as “digital gold.”&nbsp;



“We’re at an interesting point in the S-curve of bitcoin’s adoption where you see penetration rising quickly because of ETFs and the US government’s strategic reserve. Bitcoin inflows exceeded Nasdaq’s QQQ inflows last year, which is crazy,” Jiang said. “Most players still don’t appreciate the nuance that BTC performance is vastly different from the rest of the crypto market.”



It’s not just all about orange coin either, which is incidentally up 11% on the week.



The faltering performance of most liquid funds is impacted by a dark, looming cloud hovering over the altcoin market. The glut of L1/L2, DeFi, DePIN, AI and memecoins that already exist and are soon to be unlocked spells a bleak outlook, Defiance Capital’s Arthur Cheong told me.



“The unlock schedule for all alts, excluding ETH, is estimated to be $1 billion every month for the next two years. There simply isn’t that much demand for altcoins. The total capital by all crypto liquid funds comes up to ~$10-15 billion of capital,” Cheong said.



These structural dynamics, too, affect liquid funds specialized in market-neutral strategies.



“Even when projects try to sell their locked tokens over the counter (OTC) at 30-40% discounts, it’s hard to find a buyer. There’s a broad expectation by markets that altcoins will plunge,” Presto research analyst Min Jung said.



$60 billion in buying pressure would be needed to sustain the prices of the top 10 largest tokens (STRK, ENA, JUP, ONDO, etc.) launched in 2024, Presto <a href="https://www.prestolabs.io/research/is-fdv-a-meme">wrote</a> last year.



This mismatch in demand and supply means that liquid funds must work harder to pick the “right” winners.&nbsp;



The “rising tide (BTC) lifts all boats (altcoins)” phenomenon of past cycles is no more.



In the second part of this series, we’ll look at:



<ul class="wp-block-list">
<li>How are liquid funds are grappling onto fundamentals to adapt?</li>



<li>What crypto sectors are liquid funds looking at?</li>



<li>Is the four-year cycle dead? </li>



<li>Is the L1 valuation premium dead? </li>
</ul>



Keep your eyes peeled for Part Two later this week in the 0xResearch newsletter.



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Why is it so hard for crypto liquid funds to beat bitcoin this cycle?

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Bitcoin bull runs are pre-programmed. Act accordingly.



Contrarians have instinctively challenged that notion. But the idea that bitcoin’s price moves like clockwork is becoming less absurd over time, even to the most pragmatic thinkers.



Last month, on the one-year anniversary of Bitcoin’s fourth halving, we checked on bitcoin miners to gauge their production cost for each coin.



This past weekend, meanwhile, has put us at five years since the 2020 halving.



Strangely, post-halving price action this time around has trended almost exactly opposite to how it tracked following the third halving. Let’s take a look at how it all stacks up.



<h2 class="wp-block-heading">Living History</h2>



First of all, it’s no secret that Bitcoin halvings tend to overlap with bull market cycles.



What’s iffy, at least for bears and the perma-sidelined, is whether halvings inherently cause major rallies.



Since Supply Shock is literally the name of this (very educational, non-financial-advice) newsletter, it’s clearly not up for debate.



Bitcoin’s inflation rate is periodically cut in half, doubling the cost of production and leading to a series of supply crunches over the next few years as sell-side liquidity dries up, each one reflected in a new all-time high.



The chart below plots bitcoin price movements around halvings. The lines start six months prior to each halving and extend until the next one, in total covering around four and a half years. As you can see, halvings two and three generally followed a similar trajectory, even if the purple line is much less volatile.



Not shown: the price of bitcoin after the first halving in 2012, which went 240x in less than a year. Check out this interactive chart to toggle lines yourself.



We already know that bitcoin returns have diminished every four-year cycle. The pattern is shown here — bitcoin’s rally topped out at more than 4,200% in the 2016-2020 cycle but “only” managed about 700% between 2020 and 2024.



Bitcoin has otherwise risen by as much as 260% or so since last April’s halving, although we’re technically only about 27% of the way to the next one. That’s a lot of room to move!



The bitcoin market is also vastly different in 2025 than it was in 2017. So, it makes much more sense to only compare this cycle to the one directly prior.



Notice that for the six months leading up to each halving — purple in 2020 and pink in 2024 — their respective lines are inversely correlated. When bitcoin was going down in the weeks before the 2020 halving, bitcoin was going up in the equivalent period in 2024 amid buzz for bitcoin ETFs.



The same effect can be seen starting just over 200 days on from the halving. The pink line starts to go down as the purple line keeps going up to its May 2021 peak.



There are plenty of price targets out there for those wondering just how far bitcoin might have left to run in this cycle.



With bitcoin still 5% below its most recent all-time high set in January, we’re all just waiting for the pink line to meet the purple line and never look back, for once this cycle.



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Bitcoin is proving the link between halvings and price

US equities and cryptocurrencies rallied Monday, following news that Chinese and American officials agreed to temporarily slash tariffs while details of a comprehensive deal are ironed out.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes are both now trading above their April 2 levels, reversing the “Liberation Day” selloff that plagued markets for weeks.&nbsp;



Bitcoin surpassed $105,000 early Monday morning, hitting its highest price since January when the crypto reached a new all time high above $109,000. Ether also rallied Monday, gaining as much as 4.6% in the early hours of the morning.&nbsp;



After meeting in Geneva over the weekend, China and the US announced in a joint statement that tariffs on Chinese imports to the US will fall from 145% to 30%. China will lower levies on US imports from 125% to 10%. These changes will be in effect for 90 days.&nbsp;



Treasury Secretary Scott Bessent said Monday during an <a href="https://www.cnbc.com/2025/05/12/bessent-sees-tariff-agreement-as-progress-in-strategic-decoupling-with-china.html">interview</a> with CNBC that the goal for the US is to decouple from China when it comes to “strategic necessities.”&nbsp;



“We do not want a generalized decoupling from China,” he said.&nbsp;



The outcome is positive, especially after reports over the weekend that the two days of meetings were especially tense. But it’s important to note that this is a ceasefire, not a deal, Noelle Acheson, author of the Crypto is Macro Now newsletter, said in a note Monday.&nbsp;



That being said, analysts warn that until a long-term agreement is in place, volatility is likely to remain.&nbsp;



“I do believe this could be a hollow rebound, as it is based on sentiment and the political moves of a single man,” James Toledano, chief operating officer at Unity Wallet said of the rally in cryptocurrencies.&nbsp;



“Anyone who is serious about crypto would prefer that fundamentals are the driving force,” he added.&nbsp;



The next breakout for crypto will not come until regulatory clarity is reached in the US, Toledano said, and for now, policy remains in political limbo.



Senators last week failed to advance the GENIUS Act, a stablecoin bill that once touted robust bipartisan support, during a key procedural vote. While the bill could still pass, several Democrats, including two of the bill’s original co-sponsors, have said the legislation needs more work.



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Bitcoin approaches all-time high on tariff news, but headwinds remain

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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If the first version of real-world assets was akin to NFTs, the second version’s more like memecoins (just because of liquidity), Gauntlet’s Tarun Chitra explained on this morning’s <a href="https://blockworks.co/podcast/empire/46930c4e-2d11-11f0-84b2-8f724b6699b4">Empire podcast.&nbsp;</a>



 ”It&#8217;s a lot easier to deal with composability-wise, and you don&#8217;t have to build a whole separate stack. NFTs had to build their own total separate stack, and then once people stopped using them, that stack also kind of fell. And so I think being able to have this kind of liquidity aspect to RWAs was just not there,” Chitra said.&nbsp;



The episode focuses — as you might be able to tell from the above quote and the recent <a href="https://securitize.io/learn/press/securitize-and-gauntlet-launch-levered-rwa-strategy-on-apollo-diversified-credit-securitize-fund">announcements</a> from these three — on the tokenization of private credit with Securitize’s Carlos Domingo and Apollo’s Christine Moy.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/0FsiR_qjtE0?si=AFCJv78JYps6zXWJ" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







For Securitize and Apollo, this represents another step in a <a href="https://blockworks.co/news/apollo-securitize-partnership-institutional-adoption">partnership</a> that began earlier this year. But to Chitra’s earlier point, RWAs have come a long way.&nbsp;



“ The fact that we are making traditional assets interoperable with open architecture is the key point,” Moy explained. In the earlier versions, Moy’s work was focused on “bespoke systems that were behind walled gardens.”



We all know that one of the downsides of the so-called traditional way of doing things at big financial institutions is that everything innovative takes time to develop. Part of it is just the process. The other, compliance.&nbsp;



But as Moy said,  ”the velocity of innovation in the crypto space is significant, because what you have is open source code, open architecture, that&#8217;s well understood. You have smart contract libraries that have already been audited, and are composable.”



In the late <a href="https://securitize.io/learn/press/securitize-and-gauntlet-launch-levered-rwa-strategy-on-apollo-diversified-credit-securitize-fund">April announcement</a>, Domingo said its RWA strategy is an example of “institutional-grade DeFi we’ve been working to build: making tokenized securities not only accessible, but compelling to crypto-native investors seeking strategies that objectively outpace their traditional counterparts.”



To put it simply, the door is now open for institutional investors to earn some “enhanced yields” that were previously off the table.&nbsp;



According to Domingo, the buyers right now are pretty crypto-native.&nbsp;



“I think for today, we&#8217;re focusing all the products. All the customers we have today for ACRED…for anything…are all crypto native people.” These native customers are accessing the “products as a better way, [a] safer way of generating returns, as opposed to some much higher-risk strategies that they can still do in crypto that involve dealing with other types of assets,” Domingo explained. 



It may not be wholly accurate to compare this market to memecoins. But, I think they do have something in common: They’re here to stay and could take even more market share as they mature (if memecoins even can mature).&nbsp;



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